Tuleva management report for first half of 2023

If you have just a 1 minute to read:

  • Since the beginning of the year, world stock markets and the prices of Tuleva’s World Stocks Pension Fund and Tuleva’s Third Pillar Pension Fund units have increased by 15%. Over the past five years, the price of a unit in Tuleva’s World Stocks Pension Fund has grown by an annual average of 8.3% (1).
  • Monthly contributions, new savers, and market growth have collectively increased the assets of Tuleva’s pension funds by 155 million euros.
  • The number of people leaving Tuleva’s funds continues to be significantly lower than average for Estonian second pillar pension funds.
  • The Tuleva team is expanding, and we are actively seeking new talent.
World stock prices have surged since the start of the year

Our pension fund assets closely follow the world market index. Since the beginning of this year, world stock prices, including those of Tuleva’s World Stocks Pension Fund and Tuleva’s Third Pillar Pension Fund units, have increased by 15%.

While short-term performance, a few months or a few years, doesn’t offer insights into the long-term growth of our assets in Tuleva’s funds, historical global financial market data reveal certain patterns further supported by Estonian pension fund statistics.

  1. Low-cost index funds tend to outperform high-cost pension funds in the long run.
This graph shows the price fluctuation of a unit of Tuleva’s World Stocks Pension Fund in comparison to the global stock market benchmark, the Estonian pension fund average (EPI), and the inflation rate. Source: Pensionikeskus.ee and MSCI, as at 31 July 2023.

No actively managed pension fund in Estonia has outperformed the global market and index funds over the past five years. Estonia is not an exception in this regard. Globally, high-fee funds consistently underperform low-cost index funds. (2)

  1. Fluctuations bring good returns

Past performance does not reliably predict future performance. If the history of the markets has taught us anything, it is that stock prices go up and down. Sooner or later, we may all experience prolonged periods when the value of our account goes down for several months or even years. Why do we – and even the Swedish state, for that matter – think that a stock fund is a good choice for building your most important financial asset?


In addition to Tuleva’s World Stocks Pension Fund, the above five-year unit price fluctuation graph also presents three second pillar funds recommended by banks for individuals in the 45–55 age range. Source: Pensionikeskus.ee (4).

The answer is straightforward: there is no such thing as a risk-free return. On its website, the Swedish Pensions Agency goes as far as to state that fluctuation in asset prices is a prerequisite for earning returns. Compared to bonds, global stock markets have significantly bolstered investors’ wealth over the last century, surpassing inflation and aligning with economic growth. While past performance doesn’t necessarily predict future outcomes, it remains the most reliable indicator we have regarding future prospects (5).

Therefore, for savers, reducing risk typically means accepting a lower expected return. Most of us don’t earn enough to accumulate substantial capital for the future without the help of returns. Nevertheless, it’s crucial to remember not to invest money in a stock fund if you’ll need it in the next few years

Five-year decline in bond fund unit prices
This graph illustrates the price fluctuation of a unit in Tuleva’s World Bonds Pension Fund compared to the global bond market benchmark, the Estonian conservative pension fund average (EPI-10), and the inflation rate. Source: Pensionikeskus.ee and Bloomberg, as at 31 July 2023.

The unit price of Tuleva’s World Bonds Pension Fund has fallen by an average of 1.7% per year over the past five years, totalling a loss of 8.9%. However, the unit price has rebounded by 0.8% since the start of this year.

Bond prices move inversely to their current yields. Five years ago, the current yield for global investment-grade bonds in euros stood at 0.8% annually, while it has risen to 3.5%, today. This is good news for those purchasing bonds now. Unfortunately, the value of bonds bought five years ago, as well as the unit value of our bond fund, has significantly declined.

Tuleva’s World Stocks Pension Fund is now 100% invested in equities

Following the last bond sale in March, our World Stocks Pension Fund is now 100% invested in stocks, fully mirroring the portfolio of Tuleva’s Third Pillar Pension Fund. Since the second half of 2019, legislation has allowed second pillar funds to allocate 100% of their assets to stocks, compared to the previous limit of 75%. We chose a gradual transition over three years and, by the beginning of this year, only about 5% of the fund’s assets remained in bonds. In March, we also exchanged this remaining portion for stocks.

Hindsight suggests the gradual approach might have been the wrong move: had we made the transition all at once in January 2020, the unit price of our fund would have increased by nearly 4% over three years. This is also the primary reason behind the difference in returns between our fund and the SEB index fund, despite the similarity in their portfolios.(3)

However, it is important to remember that investing is a long-term process subject to unpredictability. A wise approach to decision-making is to make changes incrementally, in small steps. This strategy minimises the risk of regrettable decisions requiring hasty reversals.

Assets are approaching 600 million euros

The number of people investing in index funds continues to grow steadily. July was particularly promising, with 16 million euros from new pension savers added to our second pillar funds by the end of the second exchange period. Tuleva’s World Stocks Pension Fund will likely rank among the three largest in Estonia in terms of assets by year-end.

While the size of our funds isn’t a goal in itself, larger asset volumes translate into better terms for Tuleva investors. Unlike banks, all our funds have very low fees, and an increased fund size can only further reduce these fees.

The graph depicts the volume of our second and third pillar funds, including pending deals (assets under management or AUM), measured in millions of euros. It also illustrates the 12-month variation as a percentage of the asset volume, both including and excluding extraordinary effects, such as market fluctuations and one-time compensation for second pillar payments. The unit of time is the exchange period (EP) of the second pillar.

Our actual growth rate is affected by factors that are beyond our control. In the current year, state compensation to second pillar contributions and market growth have collectively boosted our assets by nearly 95 million euros. On the other hand, those who chose to exit – whether by transferring their assets to another pension fund or withdrawing from the second pillar altogether – reduced our assets by almost 15 million euros.

Tuleva’s growth engines: contributions from current and new second pillar savers

Our mission at Tuleva is to assist more and more individuals in building future capital by regularly setting aside small amounts. Thus, it’s vital that the primary driver of our growth remains increasing monthly contributions from our current pension savers.

In the past six months, our contributors have bolstered their pension accounts by more than 40 million euros. Notably, 50% of these contributions were directed to the third pillar, which has experienced a 20% upswing within the year. With third pillar contributions, people can significantly boost their savings rates.

This graph illustrates the variation in the volume of Tuleva’s pension funds by source, with the unit of time being the exchange period (EP) of the second pillar.
Second pillar growth requires deliberate effort

We knew from the outset, when founding Tuleva, that the majority of Estonians’ financial wealth is concentrated in the second pillar. This serves as the cornerstone of achieving our mission: the true value of Tuleva lies in assisting people in effectively building their savings in the third pillar. To ensure the sustainability of our efforts, it’s important that individuals transfer their second pillar to us.

Our market share of second pillar assets currently stands at less than 9% – a fraction of its potential. However, individuals are unlikely to transfer to a new fund without a compelling reason. The long-term impact of fees on returns often eludes even those with solid financial knowledge. Presently, less than 20% of the second pillar’s total assets are held in index funds.

Over six years, we’ve learned that there’s no chart, website, or email that can act as a magic bullet and instantly persuade pension savers to switch to index funds. What truly drives change is purposeful efforts to eliminate obstacles: we minimise information overload, simplify the transfer, and provide guidance when people are ready to make informed choices. Having a friend or role model active within the Tuleva community, who can share all the relevant information, is better than any advertising campaign.

This is precisely what we strive to achieve through our product development, blog, emails, social media, customer support, and public appearances. In the early days, our team was tiny, consisting of just two full-time employees and a few assistants. This explains why our growth came at a remarkably low cost, while results fluctuated: with more time on our hands to invest, the results were outstanding; with less, they faltered.

Today, we have established a dedicated growth team, led by Erko in product development and Sten in operations. Our growth is now increasingly less reliant on my personal involvement, making it more sustainable. I’m confident that this approach will propel our growth rate to a consistently higher level.

We succeed when our savers reach their goal

We’ll reach 2.5 billion euros in assets once we have engaged 100,000 determined investors. These are individuals who have both their second and third pillar at Tuleva and contribute the maximum amount or, at the very least, 10% of their income to the third pillar. At this savings rate, these individuals stand a good chance of accumulating sufficient capital for retirement.

Currently, only 3,346 individuals are saving with such commitment. This represents just over 5% of all those who currently hold units in Tuleva’s pension funds – and this number has been slow to increase. This indicates that a significant majority of pension savers still lag far behind the savings commitment of a “determined” pension saver. How do we evaluate our progress in activating our savers?

There are two actions individuals can take to strengthen their commitment to savings:

Transfer your second pillar to Tuleva (or another index fund). Most individuals currently accumulate funds in their second pillar through high-fee bank funds, likely resulting in lower long-term returns compared to the global market. (2) Unfortunately, without substantial returns, it can be challenging to reach one’s desired accumulation goal.

Since the start of the year, 1,302 third pillar pension savers have also transferred their second pillar to us. This represents just over 6% of the full potential. The primary obstacle to transferring the second pillar seems to be hesitation, often expressed as the aversion to “putting all your eggs in one basket”. However, an index fund offers the most effective diversification, which is not improved by keeping money in another fund.

The graph depicts the number of individuals who, at the beginning of the exchange period, saved exclusively with Tuleva in the third pillar and transferred their second pillar to Tuleva during this period as well.

Contribute to the third pillar. In the first half of the year, 25,766 individuals made at least one payment to our third pillar fund, amounting to a total of 20 million euros and marking a 20% increase compared to the same period last year.

The graph displays the volume of Tuleva’s third pillar contributions in millions of euros across exchange periods, along with the corresponding growth rate.

The most reliable path to achieving your savings goal is by setting up a standing order (also known as an automatic payment). By the way, you can now do this directly on our website, without having to navigate through online banking portals. Currently, almost 15,000 people have set up standing payment orders for Tuleva. Furthermore, if circumstances permit, consider increasing the amount of your standing order. Of those with standing orders, 13% have increased their amount in the first half of the year

New pension savers

The majority of Estonian residents have not yet heard of Tuleva or have yet to take that first step. However, this year, 3,482 new pension savers have joined our ranks. The influx of new savers often depends on the prominence of pension fund discussions in the public sphere. Our website and emails serve as valuable tools to help individuals navigate the information noise and make informed choices.

The graph illustrates the number of new savers who opened a second pillar, third pillar, or both at Tuleva.

How do we reach new individuals when public discourse doesn’t revolve around pension reform? Remarkably, 80% of our new savers join us based on recommendations. When these recommendations come from respected figures in the financial industry, such as Kristi Saare or Indrek Seppo, it reinforces our belief that we are on the right path.

Even more frequently, however, recommendations come from friends, colleagues or relatives. The more people are willing to guide their social circle toward wise financial decisions, the sooner we can accomplish our mission.

Product development for a clear path

Our task is to ensure that anyone visiting the Tuleva website after a recommendation can navigate the website without running into any hurdles. We believe that 15 minutes should be enough time to launch a lifelong investment portfolio using the second and third pillars. In the first half of the year, 9% of new savers at Tuleva started by opening both a third and second pillar. We aim to increase this percentage significantly.

Low rate of leavers

Frequently switching between pension funds does not contribute to achieving better returns. In truth, it is more likely to have the opposite effect. We aim to maintain a churn rate below 3% of total assets. Currently, we have exceeded this threshold due to a somewhat higher number of second pillar withdrawals. Over the past 12 months, a total of 4.7% of assets have left the second pillar.

The graph presents the volume of assets departing from our second pillar funds, by way of transferring to other funds and pension investment accounts or exiting the second pillar altogether.
Tuleva’s financial performance is on track

An increase in asset volume leads to lower fees, provided we can control growth costs and reduce variable expenses. Throughout our six years of operation, we have successfully lowered fees for both fixed and variable costs, and we intend to continue this trend in the future.

The graph illustrates the average current fee, management fee, and gross margin weighted by the volume of Tuleva’s pension funds, all expressed as a percentage of the average volume of assets. The gross margin includes the portion of the management fee remaining after covering mandatory variable costs (deposit fee, Central Register of Securities fee, guarantee fund fee, and Financial Supervision Authority fee) to address our fixed costs. The figure for 2023 is a forecast estimate.

While new hires initially increased our costs, our results over the past months have shown that this investment in growth is already paying off. Our income should cover our expenses and I believe this will remain the case in the second half of the year.

The graph displays the operating profit of Tuleva Fondid AS before deducting depreciation and the profit and loss of financial investments, including pension fund units owned by us.

As always, the operating profit is supplemented by the revaluation of the pension fund units we own. In the first half of the year, this addition amounted to 0.6 million euros. It’s important to note that this is purely an accounting adjustment and doesn’t impact our economic activities

Two new team members

At the beginning of July, our new board member, Sten Andreas Ehrlich, began working with us. This brings the total number of board members to three. Sten is responsible for operations, while Erko Risthein, who joined the board in the spring, oversees product development and technology. Aside from being the third board member and chairman, I also handle investment strategy.

In August, our new office manager, Ketlin Veevo, joined our team. In addition to bettering the work environment, Ketlin also assists Pirje with customer support.

However, we still have an essential position to fill: the Head of Risk and Compliance. In the past, we have outsourced this role as a service. Given our significant growth, this approach has outlived its usefulness. However, regardless of this growth, the role does not currently require a full-time position. We have recently begun a public recruitment process, and we are optimistic about finding a qualified part-time professional by autumn. We welcome any recommendations or suggestions for potential candidates!

Next steps

In the second half of the year, our efforts will focus on activating our current pension savers, helping our savers overcome any hesitations in transferring their second pillar to Tuleva, and providing the right incentives to maximise contributions to the third pillar.


(1) All data on pension funds are from Pensionikeskus.ee as at 31 July 2023.

(2) See, for example, the S&P analysis here and the comparison of Estonian second pillar pension funds with index funds here.

(3) I am currently working on a blog post about the differences between index funds. The five stock index funds available to Estonian second pillar contributors also differ slightly in terms of portfolio composition principles, which can lead to differences in short-term performance.

(4) The chart compares Tuleva’s World Stocks Pension Fund, the LHV L Pension Fund, the Swedbank Generation 1970–79 Pension Fund, and the SEB Progressive Pension Fund. I conducted this analysis on 23 August 2023, a few days after my 50th birthday. I couldn’t find a recommendation for my age group on Luminor’s website. Interestingly, the recommendations of a bank tend to change drastically once you mention that you’re saving with Tuleva. Initially, they may suggest their high-fee fund, but once you mention Tuleva, they suddenly remember that they too can offer an index fund.

(5) My trusted source for the history of global financial markets is the data collected by Paul Marsh, Mike Staunton, and Elroy Dimson of the London Business School, published annually as the Global Investment Returns Yearbook. Unfortunately, Credit Suisse, which owned the rights to publish this book, ceased operations this year. I hope this valuable data will continue to be published by other entities in the future.

Wise added to Tuleva’s portfolio

In May, MSCI, the world’s largest compiler of stock market indexes, included the first Estonian company, Wise plc, in its global equity market indexes. As a result, Wise shares were added to our pension fund portfolio. Interestingly, just a few months earlier, MSCI had removed Western Union, a company operating in a similar sector but with an outdated business model.(1)

A stock market index is essentially a list. The MSCI ACWI index, which we follow, comprises approximately 3,000 of the world’s largest listed companies ranked in terms of market value. The relative share of each company in the index is its market value divided by the total market value of all the companies in the index. (2)

MSCI reviews the list quarterly, adding companies whose market value has increased sufficiently to qualify as one of the largest and removing companies that have consistently fallen below a predetermined minimum value. (3)

Wise in, Western Union out

During the May revision, 86 companies were added to the ACWI index, while 39 were dropped. Notably, Electrolux shares were among those removed. In an interesting twist, in February, Western Union, a former heavyweight and rival of Wise from ages past, was excluded from the index. The company’s market value had dwindled to €4 billion, rendering it too small to remain in the index.

This is how passive investing works. Growing companies are included in our portfolio, while those performing poorly are eliminated. Find out more about what one index fund is doing to ensure future capital growth.

Important information on conflicts of interest

But wait, why am I even bothering to talk about the addition of just one stock to Tuleva’s portfolio? I mean, they add and remove stocks all the time, right? Well, let me tell you straight up: Tuleva and Wise are like peas in a pod! They’ve got more in common than meets the eye.

Taavet and Kristo, founders of Wise, are among our founding members, and Kristo also serves on Tuleva’s supervisory board. This connection is not coincidental. Wise emerged from the same frustration that led to the establishment of Tuleva. They are combating hidden fees imposed by banks for currency exchange and international payments. Similarly, Tuleva aims to challenge high government fees and concealed costs associated with pension funds, allowing Estonian people to save money for themselves rather than the banks.

It was only natural for Kristo and Taavet to support pension system improvements and participate in building a startup that belongs to the Estonian people. I am delighted that the connection now goes both ways. It is only fitting for a progressive financial company to be part of Tuleva’s investment portfolio.

I personally hold some Wise shares in my trading account. A few years back, I received 200 shares as one of Wise’s first customers (my username is number 7). I also went ahead and bought some more shares on the stock exchange last year. And since the end of last year, I have been serving as a proud member of the supervisory board of TINV Europe AS, a subsidiary of Wise.

This raises a valid question: Why do I buy individual shares? I follow Jack Bogle’s advice: allocate 90% of your funds to an index fund and invest the remaining 10% in a trading account, using it to make bold strategic moves. While I’m passionate about financial markets and deeply interested in company reports and analyses, the money in my trading account represents less than 5% of my total holdings in index funds.

Our other board member, Erko, is also no stranger to the world of Wise. Back when Wise’s market value wasn’t sky-high, Erko spent over two years working there and was lucky enough to receive a decent chunk of stock options along with his salary. Although those Wise shares turned out to be the shining star in Erko’s portfolio, he doesn’t consider himself an investing prodigy – just a darn good engineer who happened to strike gold by working for an amazing company like Wise.

But what really ties us to Wise is the fact that they’re an Estonian initiative. Whenever we spot a big news story about an Estonian financial company making waves in the Financial Times, our hearts swell with pride. And this time, it’s not some scandalous tale about banks laundering money.(smiley)

Of course, what’s also crucial is that the decision to include Wise in our portfolio wasn’t made by me or anyone else at Tuleva. It was MSCI following its own set of rules for compiling the index that made the call.

(1) You can find the MSCI announcement regarding the inclusion of Wise here.

(2) To clarify, shares in more than 30,000 companies are traded across the world’s stock exchanges. The MSCI ACWI, however, sets a practical limit by focusing on the 3,000 largest companies. Companies falling below this limit would have a negligible impact on the overall composition of the index.

(3) The composition of the MSCI index can be explored in a more detailed (and much more complex) discussion available here.


Tuleva pension funds: Where we invest and which pension fund is best for you

In spring 2016, 22 Estonian entrepreneurs and public figures came together with a shared commitment to make pension savings more profitable for Estonians, and just like that, Tuleva was born.

In just a few months, Tuleva was joined by 3,000 members, turning the dream of better pension funds into a reality. Today, more than 63,000 savvy individuals* are already contributing to their pension savings in Tuleva’s modern, low-cost pension funds.

If you work in Estonia, 6% of your monthly salary is likely to be allocated to a second pillar pension fund (1). Opt for a low-cost fund today – the lower your fees, the more substantial your pension savings.

Choose a fund at Tuleva because the more individuals who collectively save for their pensions, the greater the advantage for everyone involved.

If you can spare just a moment,

let me tell you this:

Tuleva is not just good, it’s great for you!

Tuleva offers some of the most cost-effective pension funds in Estonia, with a total expense ratio ranging from 0.35% to 0.41%.

Tuleva is as safe as a bank fund.

It goes without saying that Tuleva’s clients enjoy all the same rights and guarantees as clients of bank pension funds. We are supervised by the Financial Supervision Authority, and the assets of our members are always held separately from the fund manager’s funds in a custodian bank, Swedbank. Furthermore, the national guarantee fund protects investors in all second pillar pension funds against the worst outcomes.

Tuleva World Stocks Pension Fund

is suitable for you if you are aged between 18 and 55 or still a long way from withdrawing your pension assets. This fund is favoured by most of the members and founders of Tuleva.

Tuleva World Bonds Pension Fund

is a conservative option that may be the best choice for you if you have only a few years left until retirement or prefer to have minimal exposure to stock market fluctuations.

Transferring your pension to Tuleva is free and takes just a few minutes – find the instructions here: 

Transfer your pension to Tuleva

Closeup: What’s inside the Tuleva fund

Tuleva funds are low-cost and follow clear rules when investing in the shares of the world’s largest companies and government bonds. Our investment strategy involves diversifying the risks over space and time, rather than seeking to outwit the market. When markets soar, the value of your investment portfolio rises while the new fund units you acquire through your monthly contributions also cost more. Conversely, during market downturns, you acquire new units at a lower price, compensating for the fluctuations

This approach is known as passive investment, and it is highly regarded by economists worldwide as the most sensible strategy for pension savers. Why? Because, in eight to nine cases out of ten, passive investment strategies have outperformed active fund management in the long run. (2)

To get the most out of Tuleva, transfer all the units in your existing pension fund(s) to Tuleva and redirect future contributions. No one knows which fund will provide the best return over your lifetime, but you can be sure you’ll save as much as possible on fees, and those savings will, in turn, earn you a return over time. Many of the Tuleva team and founding members, including myself, have already transferred all their pension assets to the Tuleva World Shares Pension Fund

Tuleva World Stocks Pension Fund

Inside the Tuleva World Stocks Pension Fund, we allocate 100% of the received funds into shares. (3)

We distribute 87.76% of the fund’s cash inflows between three index funds tracking the stock market of the developed world. Why do we use three essentially identical funds? The law restricts pension funds from investing more than 30% of their assets in a single index fund.

Here’s how we invest the funds:

29,9% in iShares Developed World ESG Screened Index Fund

29% in CCF Developed World ESG Screened Index Fund

21.71% in iShares MSCI USA ESG Screened UCITS ETF

7.25% in iShares MSCI Europe ESG Screened UCITS ETF

0.8% in iShares MSCI Japan ESG Screened UCITS ETF

Feel free to click on the links to explore these funds in detail and review their performance.

The remainder of our fund’s equity investment is allocated to an index fund tracking the stock markets of developing countries:

12.24% in iShares Emerging Market Screened Equity Index Fund (IE)

Why is this fund separate? This is because the management fee for a global index fund is higher than the sum of its individual components. This difference is particularly pronounced when comparing large markets (developed countries) with smaller markets (mostly developing countries)

It is important to note that while our funds are listed in euros, they include assets that may be listed in US dollars, Japanese yen, or other currencies. Therefore, fluctuations in currency exchange rates can impact the value of these assets in euro terms. And the other way around.

Although currency risk funds are available to Tuleva, we choose not to invest in them. Currency fluctuations are not a primary concern for pension savers. Historically, hedging currency risk has neither gained nor lost anything for the average long-term saver. Since currency hedging involves costs, we follow our principle of avoiding expenses that do not create value for the pension saver.

In September 2022, we implemented a change to exclude nearly 200 companies that do not meet sustainable and responsible investing (ESG) criteria from the list of the world’s largest 3,000 companies. This adjustment aligns with our portfolio’s main objective of achieving global market average returns while taking steps to consider and reduce the negative impact of our investments on the environment and society.

Tuleva World Bonds Pension Fund

Our second pension fund, the Tuleva World Bonds Pension Fund, adopts a conservative approach and does not invest in shares. The law requires every pension fund manager to offer, among other things, a fund that caters to individuals who cannot afford fluctuations in the value of their pension fund units while aiming for potential growth. This fund provides pension savers with the opportunity to secure their pension savings effectively. If you are nearing pension age and plan to withdraw your accumulated funds soon, this fund might be suitable for you. Additionally, you may consider transferring assets to a pension investment account rather than a bond fund to avoid potential loss in asset value. Keep in mind that although bond funds experience fewer fluctuations compared to equity funds, changes in interest rates can still impact the value of assets.

For individuals who experience anxiety about investment fluctuations, it’s important to remember that saving small amounts for your pension allows for a nicely diversified portfolio, reducing concerns about short-term fluctuations. Jack Bogle, founder of Vanguard Index Funds, recommends adopting a ‘don’t peek’ approach with your pension account. However, if you find it difficult to stop yourself checking, a bond fund might be a suitable choice. Keep in mind that panicking during a market downturn can be detrimental to your investments. If you prefer to avoid investment risks altogether, you can keep your assets in a deposit. In the case of the second pillar, this is how you can put assets into a pension investment account and keep them there in cash.

Within the Tuleva World Bond Fund, we allocate half of the funds to the Bloomberg Barclays Global Aggregate Bond Index and the other half to the Bloomberg Barclays Euro Aggregate Bond Index. This approach serves two purposes.

First, spreading the investments across bonds denominated in different currencies reduces the overall risk, which is achieved through the global index. Second, short-term fluctuations in currency exchange rates can impact the euro prices of funds tracking the global bond market index. To mitigate this currency risk, a portion of the fund is invested in a euro-denominated bond index fund.

Our risk-hedging strategy is straightforward: when in doubt between the two approaches, we adopt a balanced approach by allocating funds equally between the two indexes.

To track the euro-denominated bond index, we use two funds:

25% allocation to iShares Euro Aggregate Bond Index Fund

25% allocation to iShares Euro Government Bond Index Fund

As a result, our fund exhibits a slightly more conservative stance compared to the overall index due to its higher proportion of government bonds

To track the global bond market index, we use:

25% allocation to iShares Global Government Bond Index Fund

25% allocation to iShares Euro Credit Bond Index Fund

The second fund focuses on euro-denominated bonds issued by companies worldwide, thereby reflecting a stronger inclination towards the euro area. As our fund expands, there will be ample opportunities to align more closely with the global market while still maintaining a cost-effective approach.

Tuleva pension fund fees will always remain among the lowest in Estonia

Ongoing fees, also known as the total expense ratio, for our funds are below 0.5% per year. Why is this figure different from the 0.29% fund management fee for Tuleva pension funds?

Similar to purchasing a car, it’s essential to consider the maintenance costs when choosing a fund. As an investor, you should also factor in additional costs beyond the purchase price.

The pension fund reinvests the assets in other funds, each of which charges its own management fees. Transactions involving the fund’s assets also incur brokerage fees. These additional costs can have a significant impact on your overall investment returns, sometimes comparable to the pension fund management fees charged banks.

Essentially, the total expense ratio reflects the reduction in our pension fund’s return compared to the return on the indexes we track (after tax). The lower the total expense ratio, the greater the advantage for our investors in growing their wealth.

Put simply, the lower the cost, the higher your pension.

Following the launch of the Tuleva pension funds in 2017, the Estonian state compelled other pension funds to substantially reduce their fees. Even after this, the expenses of the Tuleva equity fund remain nearly three times lower than those of larger equity pension funds like LHV L and XL, SEB Progressive and Energetic, and Luminor A and A Plus pension funds. (4)

It is crucial to monitor your ongoing costs, or the total expense ratio of ownership, as the management fee alone tells only half the story. You can access the ongoing costs of the funds through the Pension Centre, and the Tuleva calculator provides the total expense ratio for your fund.

Our bond fund currently has costs similar to the two best-performing funds on the market: Swedbank Pension Fund Conservative and SEB Conservative.Costs are particularly important for bond funds, where returns are limited. The average rate of return on bonds in a typical Estonian conservative pension fund portfolio is less than 1% per year after tax. If the expense ratio of such a fund approaches or exceeds 1%, you end up paying the bank your entire profit.

Personally, I transferred all my second pillar pension assets to the Tuleva World Equity Pension Fund. I exchanged all the pension fund units I had accumulated thus far for units in the Tuleva fund and directed my future contributions accordingly. Kristi Saare, Community Manager of Tuleva and founder of the Club of Women Investors, has also taken the same step. Many of the Tuleva founding members have joined us.

Wishing you the best in saving for your pension,

Tõnu Pekk, Tuleva Founder and Fund Manager


(644 5100)

NB This article was updated in January 2023. We updated the number of pension savers in Tuleva and how much we reduced our fees.

(1) If you were born before 1983, you had until October 2010 to choose whether or not to save in the second pillar.

(2) According to S&P, 91% of US equity funds have underperformed the index over the past decade. You can also access S&P’s more detailed report with comparative data on euro-denominated funds.

(3) Prior to 2019, the law limited the pension fund’s equity allocation to a maximum of 75%. Consequently, our fund allocated the remaining funds to bonds issued by the world’s largest governments. Today, this restriction no longer exists and we no longer purchase additional bonds. We have gradually sold existing bonds and exchanged them for shares, resulting in a complete shift to a share-based portfolio by the beginning of 2023.

Starting from 1 September 2022, we have adopted the principles of sustainable and responsible investment, excluding companies that do not meet our criteria from our portfolio. Apart from this change, there have been no other modifications. Read more here.

(4) See comparison of ongoing fees at the Pension Centre.

To review the terms and conditions of our funds, click here and here. If you require advice, feel free to consult an expert.


Tuleva management report 2022

Dear Tuleva members and investors,

The past year was hectic. Inflation reached the highest level seen in recent decades. A war was started in Ukraine. World stock markets fell by nearly 15%.

As you know, when saving with Tuleva, we set aside a piece of our salaries every month and use it to buy more shares in the world’s largest listed companies. When stock prices go up, the value of our assets goes up. With the stock markets down last year, we saw a loss in our accounts after several very profitable years. Our assets do not always grow – that is part of the strategy.

The main danger investors face in uncertain times is not stock market fluctuations but bad decisions motivated by anxiety. Even experienced fund managers can make foolish moves when they read bad news. At the same time, the marketing departments at some fund management companies can try to take advantage of the bad news and lure you into a higher-fee fund.

“We pull the brakes at the right time!”

“Our funds were the only ones with a positive return!”

Reality is a good reminder of why it’s not wise to pay a high fee to a fund manager who promises to work magic.

Funds advertised as actively managed by Swedbank, SEB, and Luminor crashed last year, just like prudent index funds. While both follow the same pattern, the funds with higher fees consistently yield less over the long term.

As an exception, LHV’s high-fee XL and L funds earned a small profit last year. Unfortunately, these funds have traditionally underperformed compared to the market average. Thanks to staying in an index fund, I and others who have saved with Tuleva from the beginning have more pension assets even after last year’s loss.

The graph shows the change in the unit prices of the Tuleva World Stocks Pension Fund and the two largest actively managed pension funds of each bank from 1 April 2017 to 28 February 2023. Tuleva fund current fees are 0.37% per annum, while the fees of larger bank funds are 2 to 5 times higher. Source: Pensionikeskus

The best recipe for accumulating capital for a better future is simple. Start early, invest in stocks through a low-cost index fund, and stay on course – through good times and bad.

We at Tuleva do not pretend to be able to predict the future. We are simply going to buy approximately three thousand more shares in the world’s leading companies next month. And again the next month. And so on all the time. Only in this way can we be sure that our wealth will grow with the world economy and not depend on the wellbeing of any single region or economic sector. The more diversified the portfolio, the lower the risk.

What can you do to help yourself as you save money with Tuleva? Remember that ups and downs are common in the markets. If you want to save your nerves, follow the wisdom of Jack Bogle, the voice of common sense in the financial world: invest regularly and don’t peek into your account.

It makes me very proud to see that this is exactly how the vast majority of Tuleva investors tend to behave. Investors in our funds fidget much less than clients of bank funds. I wish us all determination for the future!

What did we achieve in 2022?

If you only have 1 minute:

  • 65,000 people are already saving with Tuleva funds, and our assets are about to exceed 500 million euros. Tuleva is the only fund manager whose asset volume increased last year.
  • Tuleva investors made more than one-third of all third pillar contributions in Estonia and, this spring, received nearly 9 million euros in income tax refunds from the state.
  • Tuleva’s actions are evidence-based and consistent. We do not try to predict where the markets will swing next year, but focus on the most important priorities: how to help as many people as possible to invest at low costs.
  • To help make life in Estonia better, we set ourselves an ambitious goal: we want to reach 100,000 determined investors in the coming years.

Read more:

Tuleva 100,000: our next big goal

Nearly 4,000 people have already started saving in Tuleva funds. Our assets are about to exceed the 500 million euro mark. This is several times more than we originally predicted. A more detailed summary of last year is presented below. First, though, let me tell you about the next challenge we want to tackle.

From a “smart club” to a more prosperous society

Thanks to the initiative of Tuleva members, more than a fifth of Estonian second pillar investors have already decided to choose a low-fee index fund. But 450,000 people are still paying high fees to banks in other types of funds. Only 130,000 people use the third pillar to save money with its powerful tax advantage. More than a third of them, by the way, save with Tuleva.

Thanks to the initiative of Tuleva members, more than a fifth of Estonian second pillar investors have already decided to choose a low-fee index fund. But 450,000 people are still paying high fees to banks in other types of funds. Only 130,000 people use the third pillar to save money with its powerful tax advantage. More than a third of them, by the way, save with Tuleva.

Tuleva is currently something of a “smart club”. Our typical investor has an above-average level of education, financial literacy, and income. I am convinced that Tuleva members did not come together to make better pension funds just for themselves. Our goal from the very beginning was to make life in Estonia better.

Life in Estonia gets better if as many people as possible purposefully save for their future, together with us, leading to fewer burdens for all future generations. This is Tuleva’s mission. The stronger we can grow, the more effectively we can carry out our mission.

Our mission is for all of Estonia

We have proven that our model works. Now is the time to scale it – to help many more people save money smartly. We have set ourselves a very ambitious goal: we want to reach 100,000 determined investors in the coming years.

The goal is not just 100,000 people with something trickling into a Tuleva pension fund but 100,000 people who with determination accumulate enough capital for their future. To make this goal measurable, we define these “determined investors” as people who use low-fee second and third pillar pension funds to regularly invest at least 15% of their income for their future.

Currently there are nearly 65,000 investors in Tuleva pension funds. Just under 4,000 of them are determined investors. Others have made a good start, choosing a low-fee second-pillar fund or starting to save in the third pillar. But we can help them make the pension pillars work even more efficiently.

Growth helps us fulfil our mission in many ways. If we had 100,000 determined investors in Tuleva, our assets would exceed 2 billion euros. This would bring efficiency to Tuleva, help us further reduce fees, and earn profits for Tuleva members, who made our revolution possible.

When more people in Estonia smartly save money for their future, there will be fewer burdens on all future generations.

We are not going to grab anyone by the sleeve in a shopping mall to get there; we are going to build on the foundation that we have already laid. What exactly needs to be done to reach this goal?

  • We want to activate the existing 65,000 investors so that they make the most out of saving with Tuleva and consistently move towards their goals.
  • We want to continuously find new channels and ways to reach new investors.
  • We want to make an additional savings fund so that those who have exceeded the possibilities of the pension pillars can save more, if they wish. We want to make a simple and transparent fund for saving for children.
  • We want to continue helping the state to improve legislation to remove the obstacles standing in the way of pension-focused investors.

At this point, it is important to remember how Tuleva works. Two crucial aspects distinguish us from traditional fund managers:

  • First, we only offer good funds. We don’t have good options hidden among bad ones.
  • Second, we have low fees that will continue to fall because we know that high-fee funds will underperform low-fee funds in the long run.

We also know that our success is based on trust. Unlike banks, we don’t build trust with fancy headquarters or costly marketing campaigns. Our trust has been established and remains based on three main values:

  • We keep things simple and clear because we know that unnecessary complexity (noise) prevents people from deciding for themselves.
  • Our investment strategy is consistent. We do not change it depending on market fluctuations because we know that those who start saving early and stay on course during market ups and downs are best placed to get the most out of every euro.
  • We do the right thing even when no one is looking. Our interests are not in conflict with those of the investors.
To grow faster, we want to strengthen the team and raise capital

Tuleva is now where every startup dreams of being. We have successfully grown with minimal resources. We have a strong mission, a clear strategy, and motivated people. With a sharp focus and the active participation of our members, we have grown Tuleva to be much bigger than our small team. Now is the time to help ourselves so that we can exponentially amplify our achievements so far.

To reach our ambitious goals for the coming years, we must first build a scalable organisation. We want to invest more boldly in growth.
This year, our focus is on building our team and analysing the opportunities for raising growth capital.

A four-member management board: strong players to accompany Tõnu

The beginning of 2023 has already brought important changes in Tuleva’s management. First, Erko Risthein is joining Tuleva’s management board as the head of technology and product development. Leading development sprints with me, Erko has been one of the key people in our extended team. It’s great news that we were able to convince him to really commit to Tuleva!

Our board member Mari Kuhi has decided to step aside after being on the board for five years. Mari joined us as a controller, led the launch of our third pillar fund, joined the board alongside me in 2017 and kept Tuleva’s back room in impeccable order as chief operating officer. Kristel Raesaar, who has been in charge of our communications since the beginning, is also moving on. Empathetic communication and clear messages that have strategic agility in their delivery have been critical to Tuleva’s success. We need to ensure that growing an informed and supportive community, actively listening to our investors, and spotting minor and major opportunities continue to be the priorities of the team’s daily work in the future.

We now want to find two more strong players for the management board, in addition to myself and Erko, who can bring their experience, skills, and fresh ideas to Tuleva. Are you such a player, or do you know someone who would be a good candidate? Let us know!

  • A growth-oriented COO who will bring to the table the lessons learned from previous successful projects and is able to drive process optimisation and team development.
  • A communications and marketing manager who will help synthesise our successful principles of growing an active community with new, scalable initiatives.
Together we will choose the best way to raise capital

To accelerate growth, we want to invest in hiring people, strengthening our brand, and expanding our community. The trust we have built so far, proven growth momentum, active community, and growing cash flows give us a number of great opportunities to raise capital. We will not use membership capital for growth investments, because we have made a clear promise to the contributors of the capital to keep it invested in a broad-based index fund together with our pension assets. We can use membership fees and the association’s articles that allow for the creation of purpose-based capital, to which members have the opportunity to contribute under agreed conditions. We also have the option of selling Tuleva management company’s shares to one or more strategic investors. In the long term, we may also consider listing the shares of our mutual fund management company.

Raising capital is successful when it supports our mission, increases member satisfaction as their assets increase in value, and allows us to offer good employees an incentive package that includes stock options.

The idea that Tuleva could consider listing its fund business raises a legitimate question: is it not against our original principles? Tuleva must never start playing a zero-sum game with the investors in our funds. When pension investors do well, we do well. When we lose sight of the mission, we lose our edge. And when Tuleva is successful, life in Estonia will get better.

The chairman of our supervisory board, Kristi Saare, expressed this best during a meeting: “We proved that it is possible to set up low-fee funds. Perhaps it will soon be time to prove that it is also possible to set up a better listed company.”
One of the first tasks for Tuleva’s new management board in 2023 is to analyse the options and bring the most beneficial proposal to Tuleva’s members for a decision.

2022: We moved towards our goal despite strong headwinds

Our asset volume grew by 12% last year while the volumes of all other fund managers shrank. The asset growth from the addition of new investors and contributions was 23% last year.

The graph shows the volume of assets in three Tuleva pension funds by four-month exchange periods (EP). Source: Tuleva, data from Pensionikeskus.

Third pillar contributions increased by 20%

We made regular “nudges” through email and other channels and improved the user experience online. Now you can make a contribution to our third pillar fund directly on the Tuleva website and you can also set up a standing order. Another obstacle has been cleared. Try it out here.

Pirje, our help desk manager, does a great job in increasing contributions to the third pillar by tirelessly answering people’s questions. For example: how and by how much can you contribute to the third pillar? The state could certainly do a lot toward simplification. As a small but important achievement, we also helped the Tax Board to finally publish uniform and understandable information about contribution deadlines.

Our market share in third pillar contributions in Estonia is 35% (1). I am very glad that this is where we have achieved the most success. It is also important that our investors stay on course and invest through good times and bad. This is how we ensure a good return in the long term.

1,676 third pillar investors also brought their second pillar investments to us

The continuously growing third pillar contributions lay a solid foundation for the future. For the volume of assets to grow fast enough for us to be able to contribute even more to growth and reduce fees, it is still important that investors bring their second pillar assets to us.

1,676 people is just under 7% of the 26,000 people who placed only their third pension pillar with us at the beginning of 2022. Last year, we took a deep look at what was holding back the rest. We found that the main obstacle continues to be a general lack of knowledge in and mistrust of the second pillar, which is why people postpone the decision and look for reasons to avoid change. A typical excuse is the desire to spread risk, for which keeping money in a similar fund but with higher fees does not help in any way.

In addition to regular reminders, last year, we also made additions to our web application, where the size and impact of fees are now more clearly visible. I believe we still have a lot of work to do in this area, and it will have a major impact on our asset volume growth.

In 2022, third pillar investors brought us 18 million euros worth of second pillar assets. If all those who only save in the third pillar with us also brought their second pillar to Tuleva, it would immediately add nearly 200 million euros or 40% to the volume of our assets, and would also increase the monthly contributions.

We added 6,900 new investors during the year

Finding new users is a major challenge and expense for any growing business. By building a community and an online platform and by vigorously utilising the strategic opportunities that have arisen, we have grown many times more than any other fund management company could with such a small team while spending so little. It is hard to find another fintech that has expanded at such a low cost per new customer, especially in the field of long-term savings products.

Over 80% of our new investors come through the recommendations of existing investors. Our main task is to make sure that our website and messages are simple and easy to understand. If we, the current investors at Tuleva, understand Tuleva’s investment principles well, we can effectively and confidently recommend Tuleva to our friends.

We also use every opportunity to increase outreach. Carefully responding to media inquiries is one way to do this. From time to time, we also have opportunities in the general public discussion to offer explanations and help new people get to know Tuleva. For example, this January, we added a new function to our website that lets users quickly see how much the state compensated them for their second pillar contributions This brought us over 3,000 new users who had not previously logged in on the Tuleva website.

The number of people leaving is several times smaller compared to others
During the last year, 2.6% of the second pillar assets in Tuleva were transferred to other pension funds or pension investment accounts. This is three times less than other fund managers. Thanks to this, Tuleva was the only fund manager whose number of investors and volume of assets increased last year (3).

It is hard to find another growth company in the financial sector with as low a turnover rate as ours. This is an important indicator of satisfaction – in my opinion, much more important than any indicator found through a survey.

Our assets also decreased due to people withdrawing their money from the second pillar (and to a lesser extent from the third). In 2022, nearly 11 million euros were withdrawn from Tuleva funds. Although the money accumulated in pension funds is ultimately meant to be used, the bulk of the withdrawals belonged to people who stopped saving in the second pillar before early retirement age. We try to help people carefully consider the decision to withdraw their savings. It is gratifying that the percentage of people leaving the second pillar among Tuleva investors is three times lower than in the pension funds of banks (3).

A preliminary analysis has been completed for our additional savings fund

We made preparations to create an additional savings product and identified our legal and technical options. As the first step, we can launch an alternative fund that does not require an additional licence. Operational issues (AML, collection of contributions, record keeping, etc.) must be resolved at the beginning of the year. After that, we will have to find a way to integrate the new products into our user journey without complicating our website.

Financial results: low costs and a sustainable margin

In the past five years, our revenues have grown by an average of 40% per year to 1.1 million euros. The market downturn slowed our growth last year to 12%. The bulk of our revenues are pension fund management fees, the amount of which is directly related to market fluctuations. We also earn income from the fees for joining the association.

In addition to the market decline, the corporate sustainability (ESG) strategy implemented in the autumn also had a short-term impact on slower revenue growth. We are confident that in the long term, implementing an ESG strategy will not increase our costs. We have also promised investors that the funds’ current fees will not increase. In the short term, however, we had to cover additional costs of nearly 30,000 euros at the expense of our margin (2). We are finalising negotiations with BlackRock on a new model portfolio to restore our margin to previous levels.

The image shows the averages for second and third pillar pension funds and the current fees for the fund management company’s cheapest fund, according to Pensionikeskus. Tuleva calculations as of 21 February 2023.

Low costs are an important prerequisite for achieving good long-term returns. Our low costs are not a trick to promote a single lower-volume fund. At Tuleva, all investors pay a low fee, which is used to cover fixed costs and guarantee returns for Tuleva members.

Tuleva’s current pension fund fees, management fees, and margin from 2018 to 2022. The difference between the current fees and the management fee is the fee paid to BlackRock funds. The difference between the management fee and the gross margin is the fee paid to the custodian bank, Pensionikeskus and the guarantee fund.

Our fixed costs increased by 30% during the year to 0.7 million euros. We have two types of fixed costs: operating costs to keep our business running and growth investments. The expenses for most of the growth investments accrue immediately, while the new investors added and the assets they bring will continue to earn us additional income for years to come (4).

From the very beginning of Tuleva, we have followed the principle of not using accumulated capital to cover current expenses. In accounting terms, this means that our EBITDA (earnings before interest, taxes, depreciation, and amortisation) must remain positive.

Tuleva consolidated earnings before depreciation and financial costs/income (EBITDA), 2016/18 to 2022.

We distribute our earnings according to our articles of association. First of all, all members receive a membership bonus depending on the amount of their assets held in Tuleva pension funds. The membership bonus for 2022 totalled 82,756 euros. Since the launch of our pension funds in 2017, our members have earned a total of 267,244 euros in membership bonuses, which has been reinvested in the Tuleva membership capital. You can see the amount of your accumulated membership bonus by logging into the web application. (Note! The membership bonus for 2022 will appear after the end of the general meeting.)

Tuleva’s net profits are also directly affected by the investment income on our membership capital. Our membership capital is invested mostly in the units of our own pension funds, according to the terms and conditions; its value fluctuates with the world market. In 2022, instead of investment income, we had an investment loss of 0.8 million euros. Since 2016, we have earned a total of 1.2 million euros in investment income.

We understand that the value of our equity fluctuates with the global market, and we do not allow ourselves to be disturbed by these fluctuations. Our equity capital is in sufficient reserve to ensure compliance with regulatory requirements even if global markets fall sharply.

Tõnu Pekk
Tuleva founder and fund manager

You can find the Tuleva association, Tuleva Fondid AS, and Tuleva pension funds audited reports here.

(1) Pensionikeskus data and Tuleva’s estimation of the payments made to insurance companies. Tuleva funds currently account for approximately 20% of all third pillar assets.

(2) More specifically, the deposit fee we pay increased because the share of ETFs temporarily exceeded 50%, and the cost of the funds in the portfolio also increased, since all the planned funds applying BlackRock’s ESG filter were not yet available to us at the time of the transition.

(3) According to Pensionikeskus, Tuleva’s calculations.

(4) In 2022, we capitalised 87,000 euros worth of expenses, primarily for software development. The detailed expenses are presented in the income statement of our fund manager Tuleva Fondid AS.

[Updated in 2023] What is inside Tuleva III Pillar Pension Fund?

To date, we have been able to save money in Tuleva’s very own third pillar fund more than three years! As in our second pillar funds, you don’t have to be a member of the association to join us in the Tuleva third pillar.

Start investing from the third pillar!

A simple rule to follow for both beginners and advanced investors: always start with the third pillar. There is no point in looking for other investment opportunities until you haven’t taken full advantage of the third pillar tax incentive. Why?

1. There are not many investments that guarantee an immediate 25% win

Anyone can transfer up to 15% of their gross income (but not more than 6,000 euros a year) to the third pillar free of income tax. If you have already paid your tax, you will receive a refund after filling in your income tax return. For example, if you invest 1,250 euros, the state will give you 250 euros back.

In other words, out of the 1,250 euros saved in the third pillar, your contribution is only 1,000 euros, and the government adds 250 euros. The investment will immediately receive a 25% leverage.

2. You can withdraw the money at any time

You can withdraw money from the third pillar whenever you want. You can also bequeath the units of a third pillar fund. Disbursements are taxed as follows (more here):

  • If you withdraw money before the pre-retirement age (currently 60 years), you will have to pay 20% income tax on your III pillar assets. However, this does not cancel the effect of the tax incentive. Effectively, you will have received an interest-free leverage loan from the government.
  • If you wait until your 60th birthday and have been saving for at least five years until the moment of withdrawing the money, only 10% income tax will apply.
  • Those who saved in any third pillar fund or insurance product before 2021 can withdraw money at the favourable 10% tax rate from the age of 55.

As usual with investments in stocks: don’t invest the money you need in the near future. The third pillar is suitable for saving with a longer time horizon.

3. No need to pay for a securities account

There is no need to spend time or money opening a new bank account or paying a fee for buying and holding fund units. Every Estonian already has a free account in the national pension register – the one where the second pillar assets accumulate.

Why do we need our own fund?

As said, the third pillar is the best tool for long-term saving, thanks to the tax incentive. Until now, this incentive tended to shrink in the hands of bank intermediaries. First, the fees for third pillar funds are even higher than for the second pillar. Second, the investment decisions of bank fund managers have so far not been successful for savers.

When we launched our joint third pillar fund, we did two things differently than most bank funds.

  1. The total cost of the Tuleva fund is around three times lower than the large third pillar funds of banks – up to 0.35% per year (Updated 13.12.2021). By the way, our fund may not be the lowest at any given time, because we do not subsidize the costs of any fund at the expense of other clients. But in Tuleva, you can be sure that your fund’s fees are among the lowest and that the fees will also decrease in the future. (1)
  2. Second, we do not speculate on market fluctuations but simply reserve a part of our wages every month and buy more shares of the world’s largest companies. Over time, our holdings in the companies that drive the world economy will grow, and the value of our assets will increase as the companies grow and pay dividends.

Like in the second pillar, these two things give us pretty good assurance that the growth of our assets will never lag far behind the growth of world stock markets. And as in the second pillar, the long-term performance of any bank fund has so far not even come close to the global stock market average.

As with our second pillar funds, one more thing is quite certain: the value of our assets will not rise steadily. When the world economy is in recession and stock prices fall, the market value of companies and, with it, the value of owners’ assets, including ours, will decline. This is not pleasant, but the history of the markets shows that, in the long run, we are earning more by staying on the course than by timing sales and purchases and trying to outwit the market.

Where do we invest our assets?

For the money invested in the Tuleva Third Pillar Pension Fund, we buy shares in around 3,000 of the world’s largest listed companies – all of which are included in the MSCI All Country World (MSCI ACWI) index.

As a reminder, an index is nothing but a list. The MSCI ACWI index is a list of the world’s largest listed companies by market value. The relative share of each company in the index is its market value divided by the total market value of all the companies in the index. (The stocks of more than 30,000 companies are traded on world stock exchanges. The MSCI ACWI draws a line at the 3,000 largest companies for practical reasons, as the relative share of each following company in the portfolio would be negligible.)

In September 2022, we introduced one addition: we will exclude nearly 200 companies from the list of the world’s largest 3,000 companies that do not meet the generally accepted criteria for sustainable and responsible investing (ESG). This does not change the main goal of our portfolio – to achieve the average return of the world market – but it gives an opportunity to take a small step in this direction to take into account and reduce the negative impact that our investments have on the world’s natural and social environment (2).

We do not buy stocks in these companies one by one, but we invest through four global index funds. It’s just cheaper. Due to the large volumes, the purchase of stocks involves near-zero costs for the world’s leading index funds. If we were to buy stocks in each company separately every month, it would be terribly expensive for us.

Learn more: what exactly is inside our portfolio?

We divide each euro saved in the Tuleva Third Pillar Pension Fund between BlackRock Funds as follows:

First, 88% of the money goes in index funds that invest in stocks in developed countries. These three funds are:

Why are we using these three funds that all invest in the same stocks? The Investment Funds Act allows a maximum of 30% of assets to be invested in one fund. The legislator wants to make sure that pension funds diversify their risks, although, frankly, this restriction is quite unnecessary in the event of a global index fund. In any of these three funds, the risks would already be very well diversified.

12% of the money goes to the iShares Emerging Market ESG Screened Equity Index Fund

The vast majority of companies in the MSCI ACWI index are in the developed world, and just over a tenth are in developing countries. Funds that cover the entire MSCI ACWI index have, for some reason, a higher management fee than the separate portfolios of developed and developing country funds. This is the simple reason why we use different funds to buy stocks in companies in developing countries.

Tuleva Third Pillar Pension Fund keeps a small cash reserve at all times to cover possible withdrawals. When we started the fund, the cash reserve was as much as 3% of the fund’s assets. Today, the volumes have grown so much that 0.5 million euros is enough, which is less than 0.5% of the fund’s assets.

Savers in the third pillar can sell their fund units at any time. According to the law, such a sales transaction must be completed within three banking days. As long as the size of our fund is small, we keep a slightly larger cash reserve at the beginning and review it regularly.

The current fees of the fund are 0.35% per annum.

The current fees of the Tuleva Third Pillar Pension Fund, i.e. all expenses covered from the investor’s pocket, are 0.35% per annum. These expenses include our fund’s management fee (0.23% per annum), the custodian fee (0.05% per annum) and the fees of the funds in our portfolio (0.07% per annum).

In the Tuleva Third Pillar Pension Fund, no one has to pay a fee to start saving or to withdraw money.

Our fund’s expenses are still among the lowest and more around three times lower than those of banks’ large pension funds .

Any entry and exit fees of second pillar pension funds were abolished by the state a few years ago on the proposal of Tuleva. However, in the third pillar, some bank pension funds still charge 1% of the investor’s assets as an “exit fee” when withdrawing money.

What should you do if you have already saved money in a bank fund? Unfortunately, when switching funds, you still have to leave 1% of the assets to the bank for some funds. Nevertheless, it’s still advisable to exit these funds immediately: In less than a year, a typical bank fund would charge more than Tuleva, even taking into account the cost of switching funds.


(1) You can compare the current fees of all pension funds on the Pensionikeskus page. For insurance products, you need to look carefully for the “Key information document”.

(2) Read more how Tuleva funds implement sustainability policy

*Fees and portfolio information in the article updated as of  15.05.2023


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